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Single women are almost twice as likely as single men to be homeowners in most U.S. metropolitan areas, according to a recent LendingTree study. On average, single women own about 22% of homes, compared with the 13% owned by single men.
Even in the metro area where the ownership rate among single men is the highest in the country — Oklahoma City, at 16% — homeownership among single women there exceeds that rate by 8 percentage points, according to the study. LendingTree is the parent company of MagnifyMoney.
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If you’re a single female who is considering taking the homeownership plunge, these statistics prove you’re in good company. Read on for tips on how to navigate making the biggest purchase of your life.
Pros and cons of purchasing a home on your own
As with any significant decision, both positives and negatives come with buying a home by yourself. Having a clear picture of each will ensure that you enter the homebuying process with a realistic idea of what’s ahead.
- Autonomy. Owning a home spells independence! No more depending on a landlord or anyone else for your living arrangements. You’ll also get to navigate the buying process without having to compromise or yield to someone else’s preferences.
- Building wealth. As you pay down your loan and build up equity in the home, you’ll be increasing your wealth.
- Stability. You’ll never have to worry about your rent increasing unexpectedly or having to find a new place once a lease ends.
- Vulnerability if you lose your income. You alone will be responsible for paying the mortgage. If you lose your income, there’s no co-borrower to pick up the slack. To protect yourself if that does happen, build up a healthy emergency fund of three to six months or more of expenses before buying a home.
- Difficult to qualify for a bigger mortgage with just one income. Tendayi Kapfidze, chief economist for LendingTree and the author of the U.S. homeowning gender-gap study, said this is one of the biggest disadvantages. “You’ll probably afford less when you’re by yourself than if you were combining incomes,” he stated.
- Less flexibility. Making impulsive decisions that affect you financially may no longer be an option once you become a homeowner.
- Longer to save. Coming up with a down payment is a challenge for most buyers, regardless of marital status or gender. If you’re aiming for a 20% down payment, it takes over seven years on average to save it, according to Zillow. Naturally, saving on your own means saving at a slower pace.
- Solely responsible for everything. The independence you get from buying a home comes with a downside: Everything is on you. From maintenance and repairs to taking care of the lawn, you’re either doing it on your own, getting help or paying someone.
Protecting your real estate investment as a single homeowner
One thing to keep in mind when purchasing a home on your own is how to protect your investment should your single status change in the future.
If you let a partner move in with you or you get married, you’ll need to decide how to approach ownership of the home. If your partner or spouse is to become a co-owner, then you’ll need to add them to the deed.
“Get the advice of an attorney on how to best protect your assets,” Kapfidze recommended. Depending on your other assets and the value of the home, a prenuptial legal agreement may be in order. In some cases, you may want to have a formal written agreement on how you will divide the mortgage payments and whether your partner will pay you for any equity already built up in the home.
Loan programs available
The best way to maximize your buying power as a single-income borrower is to make sure you finance it with the most cost-effective loan. This will affect the size of the mortgage you’re approved for, your monthly bills and cash flow and, ultimately, the total amount you’ll pay to finance the home.
There are multiple loan options available, depending on your situation
Conventional loans are mortgages that are not a part of a government program. They are usually the way to go if you can put at least 5% down and you have solid credit, as the better your credit score, the lower your interest rate. (Some lenders may have products that allow a 3% down payment.)
Keep in mind that if your down payment is less than 20% of the purchase price, you’ll need to pay for private mortgage insurance (PMI), which can chip away at your buying power.
With a loan from the Federal Housing Administration (FHA), you can put down as little as 3.5%, a great option if saving for a large down payment will take you a while. And the minimum credit-score requirement of 500 gives borrowers with less-than-perfect credit a shot at homeownership. (If you wish to put down 3.5%, you will need a credit score of at least 580.)
These loans do require that you pay an annual mortgage insurance premium (MIP), which is built into the monthly payment, as well as an upfront mortgage insurance fee.
If you qualify for a loan from the U.S. Department of Veterans Affairs (VA), you can purchase a home with no down payment and flexible credit requirements. Qualifying borrowers must be Active Duty service members, veterans and eligible surviving spouses.
The U.S.Department of Agriculture (USDA) offers loans to very low– to moderate-income borrowers who purchase homes in designated rural areas. These loans require no down payment, allow you to finance the closing costs and have forgiving credit requirements.
With a minimum credit score of 620 and a down payment of at least 3%, you can qualify for this program offered by Fannie Mae.
No credit score is required for this Freddie Mac program, but you’ll need to meet the income restrictions for very low– to moderate-income buyers and put down at least 3%.
Steps to becoming a homeowner
Take the intimidation factor out of buying a home on your own by approaching the process in an organized fashion. Here are some steps to take toward becoming a homeowner.
Figure out your budget. Before you start shopping for a home or looking at loans, take a look at your budget to see what size monthly payment you can afford. Figure out an “all-in” amount you can spend on housing, including the mortgage payment, taxes, insurance, maintenance, utilities and other related expenses.
Kapfidze said it’s crucial to be realistic when estimating what you can afford. “Be wary about overextending yourself when you’re single because if you do have a disruption in your income, you’ll be in a challenging situation,” he said.
Educate yourself. You may want to consider taking a homeownership course through your local HUD office or a non-profit organization in your area.
Research loan options and lenders. In addition to the mortgages listed here, check with your local HUD office to see if your state offers loan programs you may qualify for. Compare loans and lenders to find the best terms that meet your needs.
Get prequalified. You can get an idea of how much your lender will approve you for by submitting your information for a prequalification. Keep in mind that it’s just an estimate and not based on your full application.
Get pre-approved. A pre-approval will hold more weight than a prequalification while you’re shopping because it’s based on an official application. You’ll have an advantage over buyers who are shopping without one.
To increase your chances of approval, Kapfidze suggested consumers pay attention to the factors lenders will focus on the most. “Lenders care about your income, your down payment [and] your credit score. That applies to all buyers,” he said.
Start shopping. Work with a real estate professional to help you during your home search. But be prepared to stick to your guns regarding your price range, and don’t feel pressured to go over your budget.
Making an offer. Once you’ve settled on a home, your real estate agent will help you make an offer. But don’t get too attached to a property. Once you develop an emotional attachment to a house, it can be hard to look at your situation objectively and know when you need to walk away.
Closing on the home. Once your offer is accepted, you’ll go through a home inspection, work with the sellers on necessary repairs and any other steps your lender will require before closing. And then you’ll finally reach the moment you’ve been working for … you’ll be a homeowner!
Buying with confidence
Purchasing a home is a big responsibility for anyone. Single women who are considering buying a home should not be discouraged or intimidated. “There are more and more single buyers out there. A lot of people are making that move,” Kapfidze said.
If you do your research and have a firm grasp of the process, you’ll be able to approach buying and owning a home with confidence.
This article contains links to LendingTree, our parent company.